1. As used in this Code, unless the
context otherwise requires, the words and terms defined in NRS 681A.020 to 681A.080,
inclusive, have the meanings ascribed to them in those sections.

2. It is intended that certain insurance
coverages may come within the definitions of two or more kinds of insurance as
defined in this chapter, and the inclusion of such coverage within one
definition shall not exclude it as to any other kind of insurance within the
definition of which such coverage is likewise reasonably includable.

(a) Vehicle insurance. Insurance against loss of
or damage to any land vehicle or aircraft or any draft or riding animal or to
property while contained therein or thereon or being loaded or unloaded therein
or therefrom, from any hazard or cause, and against any loss, liability or
expense resulting from or incidental to ownership, maintenance or use of any
such vehicle, aircraft or animal, together with insurance against accidental
injury to natural persons, irrespective of legal liability of the insured,
including the named insured, while in, entering, alighting from, adjusting,
repairing, cranking, or caused by being struck by a vehicle, aircraft or draft
or riding animal, if such insurance is issued as an incidental part of
insurance on the vehicle, aircraft or draft or riding animal.

(b) Liability insurance. Insurance against legal
liability for the death, injury or disability of any human being, or for damage
to property, including liability resulting from negligence in rendering expert,
fiduciary or professional services, and provisions of medical, hospital,
surgical, disability benefits to injured persons and funeral and death benefits
to dependents, beneficiaries or personal representatives of persons killed,
irrespective of legal liability of the insured, when issued as an incidental
coverage with or supplemental to liability insurance.

(c) Workers’ compensation and employer’s
liability. Insurance of the obligations accepted by, imposed upon or assumed by
employers under law for death, disablement or injury of employees.

(d) Burglary and theft. Insurance against loss or
damage by burglary, theft, larceny, robbery, forgery, fraud, vandalism,
malicious mischief, confiscation, or wrongful conversion, disposal or
concealment, or from any attempt at any of the foregoing, including
supplemental coverage for medical, hospital, surgical and funeral expense
incurred by the named insured or any other person as a result of bodily injury
during the commission of a burglary, robbery or theft by another, and, also,
insurance against loss of or damage to moneys, coins, bullion, securities,
notes, drafts, acceptances or any other valuable papers and documents,
resulting from any cause.

(e) Personal property floater. Insurance upon
personal effects against loss or damage from any cause.

(f) Glass. Insurance against loss or damage to
glass, including its lettering, ornamentation and fittings.

(g) Boiler and machinery. Insurance against any
liability and loss or damage to property or interest resulting from accidents
to or explosions of boilers, pipes, pressure containers, machinery or
apparatus, and to make inspection of and issue certificates of inspection upon
boilers, machinery and apparatus of any kind, whether or not insured.

(h) Leakage and fire extinguishing equipment.
Insurance against loss or damage to any property or interest caused by the
breakage or leakage of sprinklers, hoses, pumps and other fire-extinguishing
equipment or apparatus, water pipes or containers, or by water entering through
leaks or openings in buildings, and insurance against loss or damage to such
sprinklers, hoses, pumps and other fire-extinguishing equipment or apparatus.

(i) Credit and mortgage guaranty. Insurance
against loss or damage resulting from failure of debtors to pay their
obligations to the insured, and insurance of real property mortgage lenders
against loss by reason of nonpayment of the mortgage indebtedness.

(j) Elevator. Insurance against loss of or damage
to any property of the insured, resulting from the ownership, maintenance or
use of elevators, except loss or damage by fire, and to make inspection of and
issue certificates of inspection upon, elevators.

(l) Livestock. Insurance against loss or damage
to livestock, and services of a veterinary for such animals.

(m) Entertainments. Insurance indemnifying the
producer of any motion picture, television, radio, theatrical, sport,
spectacle, entertainment, or similar production, event or exhibition against
loss from interruption, postponement or cancellation thereof due to death,
accidental injury or sickness of performers, participants, directors or other
principals.

(n) Miscellaneous. Insurance against any other
kind of loss, damage or liability properly a subject of insurance and not
within any other kind of insurance as defined in this chapter, if such
insurance is not disapproved by the Commissioner as being contrary to law or
public policy, including insurance for home protection issued pursuant to NRS 690B.100 to 690B.180, inclusive.

2. Provision of medical, hospital,
surgical and funeral benefits, and of coverage against accidental death or
injury, as incidental to and part of other insurance as stated under paragraphs
(a) (vehicle), (b) (liability), (d) (burglary), (g) (boiler and machinery) and
(j) (elevator) of subsection 1 shall for all purposes be deemed to be the same
kind of insurance to which it is so incidental, and is not subject to
provisions of this Code applicable to life and health insurances.

NRS 681A.022“Continuous care coverage” defined.“Continuous
care coverage” is the issuance of a policy of insurance for workers’
compensation, as described in paragraph (c) of subsection 1 of NRS 681A.020, issued jointly with and supplemental to
a policy for health insurance, as defined in NRS
681A.030, by one or more insurers covering the same employer for the same
policy period.

NRS 681A.030“Health insurance” defined.“Health
insurance” is insurance of human beings against bodily injury, disablement or
death by accident or accidental means, or the expense thereof, or against
disablement or expense resulting from sickness, and every insurance
appertaining thereto, together with provisions operating to safeguard contracts
of health insurance against lapse in the event of strike or layoff due to labor
disputes.

(Added to NRS by 1971, 1603)

NRS 681A.040“Life insurance” defined.

1. “Life insurance” is insurance on human
lives. The transaction of life insurance includes the granting of endowment
benefits, additional incidental benefits in the event of death or dismemberment
by accident or accidental means, additional incidental benefits in the event of
the insured’s disability, optional modes of settlement of proceeds of life
insurance, and provisions operating to safeguard contracts of life insurance
against lapse.

2. The term includes a policy of life
insurance which incorporates long-term care insurance if the policy of life
insurance may incorporate the long-term care insurance pursuant to NRS 688A.440.

(1) Vessels, craft, aircraft, cars,
automobiles and vehicles of every kind, as well as all goods, freights,
cargoes, merchandise, effects, disbursements, profits, moneys, bullion,
precious stones, securities, choses in action, evidences of debt, valuable
papers, bottomry and respondentia interests and all other kinds of property and
interest therein, in connection with any and all risks or perils of navigation,
transit or transportation, including war risks, on or under any seas or other
waters, on land or in the air, or while being assembled, packed, crated, baled,
compressed or similarly prepared for shipment or while awaiting the same or
during any delays, storage, transshipment or reshipment incidental thereto,
including marine builder’s risks and all personal property floater risks;

(2) Person or property in connection with
a marine, inland marine, transit or transportation insurance, including
liability for loss of or damage to either, arising out of or in connection with
the construction, repair, operation, maintenance or use of the subject matter of
such insurance (but not including life insurance or surety bonds or insurance
against loss by reason of bodily injury to the person arising out of the
ownership, maintenance or use of automobiles);

(3) Precious stones, jewels, jewelry,
gold, silver and other precious metals, whether used in business or trade or
otherwise and whether the same is in the course of transportation or otherwise;
and

(4) Bridges, tunnels and other
instrumentalities of transportation and communication (excluding buildings,
their furniture and furnishings, fixed contents and supplies held in storage)
unless fire, tornado, sprinkler leakage, hail, explosion, earthquake, riot or
civil commotion are the only hazards to be covered; piers, wharves, docks and
slips, excluding the risks of fire, tornado, sprinkler leakage, hail,
explosion, earthquake, riot or civil commotion; other aids to navigation and
transportation, including dry docks and marine railways, against all risks.

(b) “Marine protection and indemnity insurance,”
meaning insurance against, or against legal liability of the insured for, loss,
damage or expense arising out of, or incidental to, the ownership, operation,
chartering, maintenance, use, repair or construction of any vessel, craft or
instrumentality in use in ocean or inland waterways, including liability of the
insured for personal injury, illness or death or for loss of or damage to the
property of another person.

2. For the purposes of this Code, “wet
marine and transportation” insurance is that part of “marine and
transportation” insurance which includes only:

(a) Insurance upon vessels, crafts, hulls and of
interests therein or with relation thereto;

(c) Insurance of freights and disbursements
pertaining to a subject of insurance coming within this definition; and

(d) Insurance of personal property and interests
therein, in the course of exportation from or importation into any country, or
in the course of transportation coastwise or on inland waters, including
transportation by land, water or air from point of origin to final destination,
in connection with any and all risks or perils of navigation, transit or
transportation, and while being prepared for and while awaiting shipment, and
during any delays, storage, transshipment or reshipment incident thereto.

(Added to NRS by 1971, 1603)

NRS 681A.060“Property insurance” defined.

1. “Property insurance” is insurance on
real or personal property of every kind and of every interest therein against
loss or damage from any and all hazards or causes, and against loss
consequential upon such loss or damage, other than noncontractual legal
liability for any such loss or damage.

2. Property insurance does not include
title insurance, as defined in NRS 681A.080.

(Added to NRS by 1971, 1604)

NRS 681A.070“Surety insurance” defined.“Surety
insurance” includes:

1. Fidelity insurance, which is insurance
guaranteeing the fidelity of persons holding positions of public or private
trust.

2. Insurance guaranteeing the performance of
contracts, other than insurance policies, and guaranteeing and executing bonds,
undertakings and contracts of suretyship.

3. Insurance indemnifying banks, bankers,
brokers, financial or moneyed corporations or associations against loss,
resulting from any cause, of bills of exchange, notes, bonds, securities,
evidences of debt, deeds, mortgages, warehouse receipts or other valuable
papers, documents, money, precious metals and articles made therefrom, jewelry,
watches, gems, precious and semiprecious stones, including any loss while the
same are being transported in armored motor vehicles, or by messenger, but not
including any other risks of transportation or navigation, and also insurance
against loss or damage to such an insured’s premises or to the insured’s
furnishings, fixtures, equipment, safes and vaults therein, caused by burglary,
robbery, theft, vandalism or malicious mischief, or any attempt thereat.

4. Financial guaranty insurance, which is
insurance or bonding that guarantees the payment of the principal and interest
on a security if the issuer of the security defaults in the payment of the
principal or interest. Financial guaranty insurance does not include coverage
for items described in subsection 3.

2. Life insurance if so authorized
pursuant to subsection 1 of NRS 680A.110
(combinations of insuring powers).

(Added to NRS by 1971, 1605)

NRS 681A.095Insurance against legal liability for exemplary or punitive
damages.An insurer may insure
against legal liability for exemplary or punitive damages that do not arise
from a wrongful act of the insured committed with the intent to cause injury to
another.

NRS 681A.100Amount of risk that insurer may retain; method for determining
risk; applicability.

1. Except as otherwise provided for
domestic mutual insurers in NRS 692B.200,
an insurer shall not retain any risk on any one subject of insurance, whether
located or to be performed in this state or elsewhere, in an amount exceeding
10 percent of its surplus to policyholders.

2. A “subject of insurance” for the
purposes of this section, as to insurance against fire and hazard other than
windstorm, earthquake and other catastrophic hazards, includes all properties
insured by the same insurer which are customarily considered by underwriters to
be subject to loss or damage from the same fire or the same occurrence of any
other hazard insured against.

3. Reinsurance ceded as authorized by NRS 681A.110 must be deducted in determining the risk
retained, except that as to surety risks, reinsurance must be allowed as a
deduction only if the reinsurance is with an insurer authorized to transact
that insurance in this state, and is in such form as to enable the obligee or
beneficiary to maintain an action thereon against the reinsured jointly with
the reinsurer, and upon recovering judgment against the reinsured, to have
recovery against the reinsurer for payment to the extent to which it may be
liable under the reinsurance and in discharge thereof. As to surety risks,
deduction must also be made of the amount assumed by any authorized cosurety
and the value of any security deposited, pledged or held subject to the
surety’s consent and for the surety’s protection.

4. As to alien insurers, this section
relates only to risks and surplus to policyholders of the insurer’s branch in
the United States.

5. “Surplus to policyholders” for the
purposes of this section, in addition to the insurer’s capital and surplus,
includes any voluntary reserves which are not required pursuant to law, and
must be determined from the last sworn statement of the insurer on file with
the Commissioner, or by the last report of examination of the insurer,
whichever is the more recent at time of assumption of risk.

6. This section does not apply to life or
health insurance, annuities, title insurance, insurance of wet marine and
transportation risks, workers’ compensation insurance, financial guaranty
insurance, or to any policy or type of coverage as to which the maximum
possible loss to the insurer is not readily ascertainable on issuance of the
policy.

NRS 681A.110Reinsurance authorized for all or part of risk; requirements for
reinsurance with unauthorized insurer.An
insurer may reinsure all or any part of an individual risk or of a particular
class of risks in any other insurer or, with the approval of the Commissioner,
all its risks in an authorized insurer, or may accept such reinsurance from any
other insurer. No domestic insurer may reinsure with an insurer which is not
authorized to transact insurance or reinsurance unless:

1. The domestic insurer has the
Commissioner’s written approval; or

2. The insurer accepting the reinsurance
meets the requirements for credit provided in NRS
681A.150 to 681A.190, inclusive.

NRS 681A.120Cancellation or material changes in treaties or arrangements for
reinsurance.An insurer shall
promptly inform the Commissioner in writing of the cancellation or any other
material change in any of its treaties or arrangements for reinsurance.

NRS 681A.140“Qualified financial institution in the United States” defined.As used in NRS
681A.140 to 681A.240, inclusive, “qualified
financial institution in the United States” means an institution that:

1. Is organized, or in the case of a
branch or agency of a foreign banking organization in the United States
licensed, under the laws of the United States or any state thereof and has been
granted authority to operate with fiduciary powers;

2. Is regulated, supervised and examined
by federal or state authorities having regulatory authority over banks and
trust companies;

3. Is determined:

(a) By the Commissioner to meet the standards of
financial condition and standing prescribed by the Commissioner; or

(b) By the National Association of Insurance
Commissioners to meet the standards of financial condition and standing
prescribed by the National Association of Insurance Commissioners; and

NRS 681A.150Requirements for taking credit.No
credit may be taken as an asset or as a deduction from liability on account of
reinsurance unless the reinsurer is authorized to transact insurance or
reinsurance in this state or the requirements of NRS
681A.160, 681A.170, 681A.180
or 681A.190, and in any of these cases the
requirements of NRS 681A.200 and 681A.210 also are met.

1. Except as otherwise provided in
subsection 2, credit must be allowed if reinsurance is ceded to an assuming
insurer which is accredited as a reinsurer in this state. An accredited
reinsurer is one which:

(a) Files with the Commissioner an executed form
approved by the Commissioner as evidence of its submission to this state’s
jurisdiction;

(b) Submits to this state’s authority to examine
its books and records;

(c) Files with the Commissioner a certified copy
of a certificate of authority or other evidence approved by the Commissioner
indicating that it is licensed to transact insurance or reinsurance in at least
one state, or in the case of a branch in the United States of an alien assuming
insurer is entered through and licensed to transact insurance or reinsurance in
at least one state;

(d) Files annually with the Commissioner a copy
of its annual statement filed with the Division of its state of domicile or
entry and a copy of its most recent audited financial statement;

(e) Maintains a surplus as regards policyholders
in an amount which is:

(1) Not less than $20,000,000 and whose
accreditation has not been denied by the Commissioner within 90 days after its
submission; or

(2) Less than $20,000,000 and whose
accreditation has been approved by the Commissioner; and

1. Except as otherwise provided in
subsection 2, credit must be allowed if reinsurance is ceded to an assuming
insurer which is domiciled and licensed in, or in the case of a branch in the
United States of an alien assuming insurer is entered through, a state which
employs standards regarding credit for reinsurance substantially similar to
those applicable under this chapter and the assuming insurer or branch in the
United States of an alien assuming insurer:

(a) Maintains a surplus as regards policyholders
in an amount not less than $20,000,000; and

(b) Submits to the authority of this state to
examine its books and records.

2. The requirement of paragraph (a) of
subsection 1 does not apply to reinsurance ceded and assumed pursuant to
pooling among insurers affiliated with the same holding company.

1. Except as otherwise provided in
subsection 4, credit must be allowed if reinsurance is ceded to an assuming
insurer which maintains a trust fund in a qualified financial institution in
the United States for the payment of the valid claims of its policyholders and
ceding insurers in the United States, their assigns and successors in interest.
The assuming insurer shall:

(a) Report annually to the Commissioner
information substantially the same as that required to be reported on the
National Association of Insurance Commissioners’ form of annual statement by
licensed insurers to enable the Commissioner to determine the sufficiency of
the trust fund; and

(b) Submit to the authority of the Commissioner
to examine its books and records.

2. In the case of a single assuming
insurer, the trust must consist of an account in trust equal to the assuming
insurer’s liabilities attributable to business written in the United States and
the assuming insurer shall maintain a surplus in trust of not less than
$20,000,000.

3. In the case of a group of incorporated
and individual unincorporated underwriters:

(a) The trust must consist of an account in trust
equal to the group’s liabilities attributable to business written in the United
States.

(b) The group shall:

(1) Maintain a surplus in trust of which
$100,000,000 must be held jointly for the benefit of ceding insurers in the
United States to any member of the group; and

(2) Make available to the Commissioner an
annual certification of the solvency of each underwriter by the group’s
domiciliary regulator and its independent public accountants.

(c) The incorporated members of the group:

(1) Shall not engage in any business other
than underwriting as a member of the group; and

(2) Must be subject to the same level of
regulation and solvency control by the applicable regulatory agency of the
state in which the group is domiciled as the individual unincorporated members
of the group.

4. If the assuming insurer does not meet
the requirements of NRS 681A.110, 681A.160 or 681A.170,
credit must not be allowed unless the assuming insurer has agreed to the
following conditions set forth in the trust agreement:

(a) Notwithstanding any provision to the contrary
in the trust instrument, if the trust fund consists of an amount that is less
than the amount required pursuant to this section, or if the grantor of the
trust fund is declared to be insolvent or placed into receivership,
rehabilitation, liquidation or a similar proceeding in accordance with the laws
of the grantor’s state or country of domicile, the trustee of the trust fund
must comply with an order of the commissioner of insurance or other appropriate
person with regulatory authority over the trust fund in that state or country
or a court of competent jurisdiction requiring the trustee to transfer to that
commissioner or person all the assets of the trust fund;

(b) The assets of the trust fund must be
distributed by and claims filed with and valued by the commissioner of
insurance or other appropriate person with regulatory authority over the trust
fund in accordance with the laws of the state in which the trust fund is
domiciled that are applicable to the liquidation of domestic insurers in that
state;

(c) If the commissioner of insurance or other
appropriate person with regulatory authority over the trust fund determines
that the assets of the trust fund or any portion of the trust fund are not
required to satisfy any claim of any ceding insurer of the grantor of the trust
fund in the United States, the assets must be returned by that commissioner or
person to the trustee of the trust fund for distribution in accordance with the
trust agreement; and

(d) The grantor of the trust must waive any right
that:

(1) Is otherwise available to the grantor
under the laws of the United States; and

NRS 681A.190Reinsurance ceded to group of incorporated insurers under common
administration.

1. Credit must be allowed if reinsurance
is ceded to a group of incorporated insurers under common administration which:

(a) Does not engage in any business other than
underwriting as a member of the group;

(b) Is subject to the same amount of regulation
and solvency control by the group’s domiciliary regulator as are the
unincorporated members of the group;

(c) Reports annually to the Commissioner the
information required by subsection 1 of NRS 681A.180;

(d) Has continuously transacted insurance outside
the United States for at least 3 years immediately before making an application
for accreditation;

(e) Submits to this state’s authority to examine
its books and records and bears the expense of the examination;

(f) Has aggregate policyholders’ surplus of
$10,000,000,000; and

(g) Maintains a trust pursuant to subsection 2.

2. The trust must be in an amount equal to
the group’s several liabilities attributable to business ceded by ceding
insurers in the United States to any member of the group pursuant to contracts
of reinsurance issued in the name of the group, and the group shall maintain a joint
surplus in trust of which $100,000,000 must be held jointly for the benefit of
ceding insurers in the United States to any member of the group as additional
security for any such liabilities.

3. Each member of the group shall, within
90 days after the date its financial statements must be filed with the group’s
domiciliary regulator, make available to the Commissioner an annual
certification of the member’s solvency by the member’s domiciliary regulator
and its independent public accountant.

NRS 681A.200Requirements for establishment or amendment of certain trusts.

1. A trust for the purposes of NRS 681A.180 or 681A.190,
and any amendment to the trust, must be established or amended in a form
approved by:

(a) The Commissioner; and

(b) The commissioner of insurance or other
appropriate person of:

(1) The state in which the trust is
domiciled; or

(2) Any other state that, pursuant to the
trust instrument, accepts regulatory authority over the trust.

2. The form of the trust and any amendment
to the trust must be filed with the commissioner of insurance or other
appropriate person of each state in which the policyholders of the ceding
insurer who are the beneficiaries of the trust are domiciled.

3. The trust instrument must provide that
contested claims become valid, enforceable and payable from money held in the
trust fund to the extent that the contested claims remain unsatisfied, within
30 days after the entry of the final order of any court of competent
jurisdiction in the United States. The trust must vest legal title to its
assets in the trustees of the trust for its policyholders and ceding insurers
in the United States, their assigns and successors in interest. The trust and
the assuming insurer are subject to examination as determined by the
Commissioner. The trust must remain in effect for as long as the assuming
insurer or any member or former member of the group of insurers has outstanding
obligations due under the agreements for reinsurance subject to the trust.

4. Not later than February 28 of each year
the trustees of the trust shall report to the Commissioner in writing setting
forth the balance of the trust and listing the trust’s investments at the end
of the preceding year and shall certify the date of termination of the trust,
if so planned, or certify that the trust will not expire before the next
following December 31.

NRS 681A.210Requirements when assuming insurer is not licensed or accredited
to transact insurance or reinsurance in this State.

1. Except as otherwise provided in
subsection 2, if the assuming insurer is not licensed or accredited to transact
insurance or reinsurance in this State, the credit permitted by NRS 681A.170 or 681A.180
must not be allowed unless the assuming insurer agrees in the agreements for
reinsurance:

(a) That in the event of the failure of the
assuming insurer to perform its obligations under the terms of the agreement,
the assuming insurer, at the request of the ceding insurer, will submit to the
jurisdiction of any court of competent jurisdiction in any state of the United
States, will comply with all requirements necessary to give the court
jurisdiction, and will abide by the final decision of the court or of any
appellate court in the event of an appeal;

(b) To designate the Commissioner or a designated
attorney as its true and lawful attorney upon whom may be served any lawful
process in an action, suit or proceeding instituted by or on behalf of the
ceding company; and

(c) To comply with the conditions set forth in
subsection 4 of NRS 681A.180.

2. This section does not conflict with or
override the obligation of the parties to an agreement for reinsurance to
arbitrate their disputes if such an obligation is created in the agreement.

NRS 681A.220Requirements when assuming insurer does not meet certain
requirements.Credit must be
allowed if reinsurance is ceded to an assuming insurer not meeting the
requirements of NRS 681A.110, 681A.150, 681A.160, 681A.170, 681A.180 or 681A.190, but only with respect to the insurance of
risks located in jurisdictions where such reinsurance is required by applicable
law or regulation of that jurisdiction.

NRS 681A.230Ceding insurer to be allowed credit if reinsurance lawfully
ceded to qualified assuming insurer; domiciliary liquidator of insolvent ceding
insurer to give notice to assuming insurer of any claim against ceding insurer.

1. Credit must be allowed as an asset or
as a deduction from liability to any ceding insurer for reinsurance lawfully
ceded to an assuming insurer qualified therefor pursuant to NRS 681A.110, 681A.150, 681A.160, 681A.170, 681A.180 or 681A.190,
but no such credit may be allowed unless the contract for reinsurance provides
in substance that, in the event of the insolvency of the ceding insurer, the
reinsurance is payable pursuant to a contract reinsured by the assuming insurer
on the basis of reported claims allowed in any liquidation proceedings, subject
to court approval, without diminution because of the insolvency of the ceding
insurer. Except as otherwise provided in NRS
686C.223, those payments must be made directly to the ceding insurer or to
its domiciliary liquidator unless:

(a) The contract of reinsurance or other written
contract specifically designates another payee of the payments in the event of
the insolvency of the ceding insurer; or

(b) The assuming insurer, with the consent of the
persons directly insured, has assumed the obligations from the policies issued
by the ceding insurer as direct obligations of the assuming insurer, and in
substitution for the obligations of the ceding insurer, to the payees under
those policies.

2. The domiciliary liquidator of an
insolvent ceding insurer shall give written notice to the assuming insurer of
the pendency of any claim against the ceding insurer on any contract reinsured
within a reasonable time after such a claim is filed in the liquidation
proceeding. During the pendency of the claim, the assuming insurer may
investigate the claim and, at its own expense, interpose in the proceeding in
which the claim is to be adjudicated any defense that the assuming insurer
deems available to the ceding insurer or its liquidator.

NRS 681A.240Requirements for reduction from liability when assuming insurer
does not meet certain requirements concerning risk-based capital.A reduction from liability for the reinsurance
ceded by a domestic insurer to an assuming insurer not meeting the requirements
of NRS 681A.110 or the regulations of the
Commissioner concerning risk-based capital must be allowed in an amount not
exceeding the liabilities carried by the ceding insurer and the reduction must
be in the amount of assets held by or on behalf of the ceding insurer,
including assets held in trust for the ceding insurer, under a contract of
reinsurance with the assuming insurer as security for the payment of
obligations thereunder, if the security is held in the United States subject to
withdrawal solely by, and under the exclusive control of, the ceding insurer,
or, in the case of a trust, held in a qualified financial institution in the
United States. The security may be in any of the following forms:

1. Cash.

2. Securities listed by the Securities
Valuation Office of the National Association of Insurance Commissioners and
qualifying as admitted assets.

3. Irrevocable, unconditional letters of
credit, each issued or confirmed by a qualified financial institution in the
United States whose letters of credit are acceptable to the Commissioner, no
later than December 31 of the year for which filing is made, and in the
possession of the ceding company on or before the date of filing its annual
statement. A letter of credit meeting applicable standards of acceptability of
its issuer as of the date of its issuance or confirmation, notwithstanding the
issuing or confirming institution’s subsequent failure to meet applicable standards
of acceptability, continues to be acceptable as security until its expiration,
extension, renewal, modification or amendment, whichever first occurs.

NRS 681A.250Definitions.As
used in NRS 681A.250 to 681A.580,
inclusive, unless the context otherwise requires, the words and terms defined
in NRS 681A.260 to 681A.410,
inclusive, have the meanings ascribed to them in those sections.

NRS 681A.270“Automatic agreement” defined.“Automatic
agreement” means an agreement between a reinsured and reinsurer whereby the
ceding company is obligated to cede certain risks as provided in the agreement
and the reinsurer is obligated to accept.

NRS 681A.280“Broker for reinsurance” defined.“Broker
for reinsurance” means a person who negotiates a contract of reinsurance
between a reinsured and reinsurer on behalf of the reinsured and who receives a
commission for placement and other services rendered. The term does not include
the ceding insurer.

NRS 681A.290“Cede” defined.“Cede”
means to pass on to another insurer, who is designated the reinsurer, all or
part of the insurance written by an insurer with the object of reducing the
possible liability of the ceding insurer.

NRS 681A.310“Controlling person” defined.“Controlling
person” means a person who directly or indirectly has the power to direct, or
cause to be directed, the management, control or activities of an intermediary.

NRS 681A.350“Manager for reinsurance” defined.“Manager
for reinsurance” means a person who has authority to bind or manage all or part
of the assumed reinsurance of a reinsurer and acts as an agent for the
reinsurer whether known as a manager or other similar term. The term includes
the manager of a separate division, department or underwriting office who acts
as an agent for a reinsurer. For the purposes of NRS
681A.250 to 681A.580, inclusive, the following
persons are not managers with respect to a reinsurer:

1. An employee of the reinsurer;

2. A manager of a branch of an alien
reinsurer located in the United States;

3. An underwriting manager who, pursuant
to a contract, manages all or part of the reinsurance of the reinsurer, is
under common control with the reinsurer within the meaning of chapter 692C of NRS, and whose compensation is
not based on the volume of premiums written; or

4. The manager of a group, association, pool
or organization of insurers who engage in joint underwriting or joint
reinsurance and who are subject to examination by the commissioner of the state
in which the principal business office of the manager is located.

NRS 681A.400“Syndicate” defined.“Syndicate”
means a joint underwriting operation of insurance or reinsurance in which the
participants assume a predetermined and fixed interest in the insurance written
and the members share equally in the premiums.

NRS 681A.410“Violation” defined.“Violation”
by an intermediary, insurer or reinsurer for whom the intermediary was acting
means failure to comply substantially with the provisions of NRS 681A.250 to 681A.580,
inclusive.

1. A person shall not act as a broker for
reinsurance for a domestic insurer or reinsurer unless the person is:

(a) A licensed producer in this state; or

(b) Licensed as a nonresident intermediary for
reinsurance in this state.

2. A person shall not act as a broker for
reinsurance for a foreign or alien insurer or reinsurer if the person maintains
an office, directly or as a member or employee of a firm or association or as
an officer, director or employee of a corporation in this state, unless the
person is:

(a) A licensed producer in this state; or

(b) Licensed as a nonresident intermediary for
reinsurance in this state.

3. A person shall not act as a manager for
reinsurance for a domestic insurer or reinsurer unless the person is:

(a) A licensed producer in this state; or

(b) Licensed as a nonresident manager for
reinsurance in this state.

4. A person shall not act as a manager for
reinsurance for any foreign or alien insurer or reinsurer if the person
maintains an office, directly or as a member or employee of a firm or
association or as an officer, director or employee of a corporation in this
state, unless the person is:

(a) A licensed producer in this state; or

(b) Licensed as a nonresident manager for
reinsurance in this state.

5. A manager for reinsurance shall:

(a) File a bond from an insurer in an amount that
is acceptable to the Commissioner for the protection of the reinsurer; and

(b) Maintain a policy covering errors and
omissions in an amount that is acceptable to the Commissioner.

1. The Commissioner may issue a license to
act as an intermediary to any person who has complied with the requirements of NRS 681A.250 to 681A.580,
inclusive, and who submits a written application for a license to act as an
intermediary, the appropriate fee set forth in NRS 680B.010 and, in addition to any
other fee or charge, all applicable fees required pursuant to NRS 680C.110. A license issued to a firm
or association authorizes all the members of the firm or association and any
designated employees to act as intermediaries. All those persons must be named
in the application and any supplements thereto. A license issued to a
corporation authorizes all of the officers and any designated employees and
directors of the corporation to act as intermediaries on behalf of the
corporation. All those persons must be named in the application and in any
supplements thereto.

2. If an applicant for a license to act as
an intermediary is a nonresident, the applicant shall:

(a) Designate the Commissioner as agent for
service of process;

(b) Furnish the Commissioner with the name and
address of a resident of Nevada upon whom notices or orders of the Commissioner
or process affecting the nonresident reinsurance intermediary may be served;
and

(c) Promptly notify the Commissioner in writing
of every change in the applicant’s designated agent for service of process. The
change is not effective until acknowledged by the Commissioner.

NRS 681A.440Circumstances under which Commissioner is authorized to refuse
to issue license.

1. The Commissioner may refuse to issue a
license to act as an intermediary if, in the judgment of the Commissioner:

(a) The applicant, anyone named on the
application, or any member, principal, officer or director of the applicant, is
not trustworthy to act as an intermediary;

(b) Any controlling person of the applicant is
not trustworthy to act as an intermediary;

(c) The applicant, a person named on the
application, any member, principal, officer or director of the applicant or any
controlling person of the applicant has given cause for the revocation or
suspension of a license to act as an intermediary; or

(d) The applicant, a person named on the
application, any member, principal, officer or director of the applicant or any
controlling person of the applicant has failed to comply with any prerequisite
for the issuance of a license to act as an intermediary.

2. Upon receipt of a written request, the
Commissioner shall furnish a summary of the basis for his or her refusal to
issue a license to act as an intermediary. Except as otherwise provided in NRS 239.0115, the summary is
confidential.

1. A transaction between a broker for
reinsurance and the insurer he or she represents may only be entered into by
written agreement. The agreement must specify the responsibilities of each
party.

2. The insurer may terminate the authority
of the broker for reinsurance at any time.

3. The broker for reinsurance shall:

(a) Render accounts to the insurer accurately
detailing all material transactions, including information necessary to support
all commissions, charges and other fees received by or owing to the broker for
reinsurance; and

(b) Remit all money due to the insurer within 30
days after receipt.

4. All money collected for the account of
the insurer must be held by the broker for reinsurance in a fiduciary capacity
in a bank or credit union which is a qualified financial institution.

5. The broker for reinsurance shall comply
with the written standards established by the insurer for the cession or retrocession
of all risks.

6. The broker for reinsurance shall
disclose to the insurer any relationship with any reinsurer to which insurance
will be ceded or retroceded.

1. An insurer shall not engage the
services of any person to act as a broker for reinsurance on its behalf unless
the person is licensed pursuant to NRS 681A.430.

2. An insurer may not employ a person who
is employed by a broker for reinsurance with whom it transacts business, unless
the broker for reinsurance is under common control with the insurer within the
meaning of chapter 692C of NRS.

3. The insurer shall annually obtain a
copy of statements of the financial condition of each broker for reinsurance
with which it transacts business.

1. Transactions between a manager for
reinsurance and the reinsurer he or she represents must only be entered into
pursuant to a written contract which specifies the responsibilities of each party
and is approved by the board of directors of the reinsurer. At least 30 days
before a reinsurer assumes or cedes insurance, a copy of the contract must be
filed with the Commissioner for approval.

2. The reinsurer may terminate the
contract for cause upon written notice to the manager for reinsurance and the
reinsurer may suspend the authority of the manager for reinsurance to assume or
cede insurance during the pendency of any dispute regarding the cause for
termination.

3. The manager for reinsurance shall:

(a) Render accounts to the reinsurer accurately
detailing all material transactions, including information necessary to support
all commissions, charges and other fees received by or owing to him or her; and

(b) Remit all money due pursuant to the contract
to the reinsurer monthly.

4. All money collected for the account of
the reinsurer must be held by the manager for reinsurance, in a fiduciary
capacity, in a bank or credit union which is a qualified financial institution.
The manager for reinsurance may retain no more than the total of 3 months’
estimated payments on claims and allocated expenses of adjusting losses. The
manager for reinsurance shall maintain a separate account in a bank or credit
union for each reinsurer that he or she represents.

5. The contract must not be assigned in
whole or in part by the manager for reinsurance.

NRS 681A.500Managers: Compliance with certain standards established by
insurer; required provisions in contract; relationship with reinsurer.

1. A manager for reinsurance shall comply
with the written underwriting and rating standards established by the insurer
he or she represents for the acceptance, rejection or cession of all risks.

2. The contract must set forth the rates,
terms and purposes of commissions, charges and other fees which the manager for
reinsurance may levy against the reinsurer.

3. The manager for reinsurance shall
annually provide the reinsurer with a statement of the financial condition of
the manager for reinsurance prepared by an independent certified public
accountant.

4. The reinsurer shall conduct a review of
underwriting and the handling of claims by the manager for reinsurance at the
location of the operations of the manager for reinsurance at least twice each
calendar year.

5. The manager for reinsurance shall
disclose to the reinsurer any relationship the manager for reinsurance has with
an insurer before ceding or assuming insurance to or from the insurer pursuant
to the contract.

6. The acts of the manager for reinsurance
shall be deemed to be the acts of the reinsurer on whose behalf the manager for
reinsurance is acting.

1. If a contract between a manager for reinsurance
and the reinsurer he or she represents permits the manager for reinsurance to
settle claims on behalf of the reinsurer:

(a) All claims must be reported to the reinsurer
in a timely manner; and

(b) A copy of the claim file must be sent to the
reinsurer at its request or as soon as it becomes known that the claim:

(1) Potentially exceeds the amount
determined by the Commissioner or the limit set by the reinsurer, whichever is
the lesser amount;

(2) Involves a dispute over coverage;

(3) May exceed the authority of the
manager for reinsurance to settle claims;

(4) Has been open for more than 6 months;
or

(5) Is closed by payment of the lesser of
an amount set by the Commissioner or an amount set by the reinsurer.

2. All claims files are the joint property
of the reinsurer and the manager for reinsurance. Upon an order of liquidation
of the reinsurer, the files become the sole property of the reinsurer or its
estate. The reinsurer or its estate shall allow the manager for reinsurance to
have reasonable access to and to copy the files on a timely basis.

3. The reinsurer may terminate any
authority to make settlements granted to the manager for reinsurance for cause
upon written notice to him or her or upon the termination of the contract. The
reinsurer may suspend the authority of the manager for reinsurance to make
settlements during the pendency of the dispute regarding the cause of
termination.

NRS 681A.520Managers: Sharing of interim profits.If
a contract between a manager for reinsurance and the reinsurer he or she
represents provides for a sharing of interim profits by the manager for
reinsurance, the interim profits must not be paid until 1 year after the end of
each underwriting period for property insurance and 5 years after the end of
each underwriting period for casualty insurance, and not until the adequacy of
reserves on remaining claims has been verified pursuant to NRS 681A.550.

NRS 681A.530Managers: Maintenance of records of transactions; access to
accounts and records by reinsurer.

1. For at least 10 years after expiration
of each contract of reinsurance transacted by a manager for reinsurance, the
manager for reinsurance shall keep a complete record for each transaction,
including evidence of:

(a) The type of contract, limits, underwriting
restrictions, classes or risks and territory;

(b) The period of coverage, including effective
and expiration dates, provisions concerning cancellation and notice of
cancellation, and disposition of outstanding reserves on covered risks;

(c) The requirements for reporting and settling
balances;

(d) The rate used to compute the reinsurance premium;

(e) The names and addresses of reinsurers;

(f) The rates of all commissions for reinsurance,
including the commissions on any retrocessions handled by the manager for
reinsurance;

(g) Any related correspondence and memoranda;

(h) Proof of placement;

(i) Any details regarding retrocessions handled
by the manager for reinsurance, including the identity of retrocessionaires and
percentage of each contract assumed or ceded;

(j) Financial records, including accounts of
premium and loss; and

(k) If the manager for reinsurance places a
contract of reinsurance on behalf of a ceding insurer:

(1) Directly from any assuming reinsurer,
written evidence that the assuming reinsurer has agreed to assume the risk; or

(2) Through a representative of the assuming
reinsurer, other than an employee, written evidence that the reinsurer has
delegated binding authority to the representative.

2. The manager for reinsurance shall allow
a reinsurer to have access and to copy all accounts and records maintained by
the manager for reinsurance related to its business in a form usable by the
reinsurer.

1. Except as otherwise provided in this
section, cede retrocessions on behalf of the reinsurer. A manager for
reinsurance may cede facultative retrocessions pursuant to facultative
agreements if the contract with the reinsurer contains guidelines for
underwriting the retrocessions. The guidelines must include a list of
reinsurers with which automatic agreements are in effect, and for each
reinsurer, the coverages and amounts or percentages that may be reinsured, and
commission schedules.

2. Commit the reinsurer to participate in
syndicates for reinsurance.

3. Appoint any producer without verifying
that the producer is licensed to transact the type of reinsurance for which the
producer is appointed.

4. Without approval of the reinsurer, pay
or commit the reinsurer to pay a claim, net of retrocessions, that exceeds the
lesser of an amount specified by the reinsurer or 1 percent of the
policyholder’s surplus of the reinsurer as of December 31 of the last complete
calendar year.

5. Collect any payment from a
retrocessionaire or commit the reinsurer to any settlement of a claim with a
retrocessionaire, without the approval of the reinsurer. If approval is given,
the manager for reinsurance shall promptly forward a report to the reinsurer.

6. Employ a person who is employed by the
reinsurer unless the manager for reinsurance is under common control with the
reinsurer within the meaning of chapter 692C
of NRS.

1. A reinsurer shall not engage the
services of any person to act as a manager for reinsurance on its behalf unless
the person is licensed as required by NRS 681A.430.

2. A reinsurer shall annually obtain a
copy of statements of the financial condition of each manager for reinsurance
whom the reinsurer has engaged. The statements must be prepared by an
independent certified public accountant in a form approved by the Commissioner.

3. If a manager for reinsurance
establishes reserves for losses, the reinsurer shall annually obtain the
opinion of an actuary attesting to the adequacy of reserves established for
losses incurred and outstanding on the business produced by the manager for
reinsurance. The opinion of the actuary must be in addition to any other
required certification.

4. An officer of the reinsurer must have
authority to bind a reinsurer for all retrocessional contracts and for
participation in syndicates for reinsurance. The officer must not be affiliated
with the manager for reinsurance.

5. At least 30 days before termination of
a contract with a manager for reinsurance, the reinsurer shall provide written
notification of the termination to the Commissioner.

6. Except as otherwise provided in chapter 692C of NRS, a reinsurer shall not
appoint to its board of directors any officer, director, employee, controlling
shareholder or subproducer of its manager for reinsurance.

1. An intermediary is subject to
examination by the Commissioner. The intermediary shall allow the Commissioner
to have access to all of the books, bank accounts and records of the
intermediary in a form usable to the Commissioner.

2. A manager for reinsurance may be
examined as if he or she were the reinsurer.

NRS 681A.570Actions that may be taken against intermediary who fails to
comply with laws.

1. If the Commissioner believes that the
reinsurance intermediary or any other person has not materially complied with NRS 681A.250 to 681A.560,
inclusive, or any regulation adopted or order issued pursuant thereto, the
Commissioner may, after a hearing conducted in accordance with NRS 679B.310 to 679B.370, inclusive, order:

(a) For each separate violation, the payment of a
penalty in an amount not exceeding $5,000; and

(b) The revocation or suspension of the license
of the reinsurance intermediary.

2. If the Commissioner finds that the
material noncompliance of the reinsurance intermediary has caused the insurer
or reinsurer any loss or damage, the Commissioner may initiate a civil action
against the intermediary on behalf of the insurer or reinsurer and the
policyholders and creditors of the insurer or reinsurer to recover compensatory
damages or other appropriate relief for the benefit of the insurer or reinsurer
and the policyholders and creditors.

3. If an order of rehabilitation or
liquidation of the insurer has been entered and the receiver appointed by that
order determines that:

(a) The reinsurance intermediary or any other
person has not materially complied with NRS 681A.250
to 681A.560, inclusive, or any regulation adopted
or order issued pursuant thereto; and

(b) The insurer has suffered any loss or damage
as a result of that noncompliance,

Ê the receiver
may bring a civil action for the recovery of damages or for any other
appropriate sanctions on behalf of the insurer.

NRS 681A.580Rights of relevant parties not limited or expanded.NRS 681A.250 to 681A.580, inclusive, do not limit or restrict the
rights of policyholders, claimants, creditors or other third parties or confer
any rights on such persons.